#37: Go Gig or Go Home with Diane Mulcahy
#37: Go Gig or Go Home with Diane Mulcahy
The explosion of the gig economy is real. Are you ready? In #37, Hala speaks with Diane Mulcahy, one of the first experts on the Gig Economy, which is a term that describes a labor market with the prevalence of short-term contracts or freelance work as opposed to permanent full-time jobs. Diane taught a class on the subject which was listed in Forbes’ “Top Ten Most Innovative Business School Courses in the Country.” She also wrote a book called “The Gig Economy,” and is a leading authority on the topic who has been featured in publications like Forbes, CNN, Cosmopolitan, Oprah.com and more. Last year, the Bureau of Labor Statistics reported that 55 million people in the U.S. are “gig workers,” which is more than 35% of the U.S. workforce. And that number is projected to jump to 43% by 2020! In this episode, you’ll learn all about the gig economy and how it came about, why people choose gig work, and how to be successful in the gig economy and thrive financially when generating variable income.
#37: Go Gig or Go Home with Diane Mulcahy
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I'm your host Hala Taha, and today we're speaking with Diane Mulcahy, one of the first experts on the gig economy, which is a term that describes a labor market with the prevalence of short term contracts for freelance work, as opposed to permanent full-time jobs. Diane taught a course on the subject, which is listed in Forbes top 10, most innovative business school
courses in the country. She's also wrote a book called the gig economy and is a leading authority on the topic who has been featured in publications like CNN, cosmopolitan, oprah.com, and more. The explosion of the gig economy is real.
[00:02:00] And so we better learn how to thrive in this new type of labor market. Last year, the bureau of labor statistics reported that
55 million people in the U S are gig workers, which is more than 35% of the U S workforce. That number is projected to jump to 43% by 2020. And this episode you'll learn all about the gig economy and how it came about why people choose get work and how to be successful in the gig economy and thrive financially when generating variable income.
Hi, Diane. It's great to have you on young and profiting podcast. Thanks for joining us.
Diane Mulcahy: It's great to be here. Thanks for having me.
Hala Taha: So to briefly introduce yourself to our listeners, you are one of the first experts on the gig economy. In fact, you've written a book about it and you actually pioneered an MBA course on the subject.
So tell us, how did you first become interested in the gig economy?
Diane Mulcahy: I first became interested in the gig economy before it was even a thing, which means that. As soon as I got
[00:03:00] my first job out of college, I went into a traditional consulting job, like many college graduates do, and I started working and I realized.
I don't love this. I really looked back on my college experience and thought it was much more interesting. I took a range of variety of classes. I had a very diverse kind of daily life doing different things. And then suddenly I started working this corporate job and I was like trekking to an office every day.
Sitting there all day for 10 hours a day and working for the same people doing the same kind of work all day. And I thought this isn't for me. I need something that looks different. So that was before the gig economy was a thing, but I always had in mind, this vision of a portfolio of work that was interesting and diverse and challenging.
So that's really what was my original interest in the gig economy.
Hala Taha: One of my research assistants actually said that he thinks you
[00:04:00] may have come up with the phrase gig economy. I couldn't validate that. So I wanted to know, is it true that you might have coined that phrase or were you an early adopter of it?
Diane Mulcahy: I would call myself an early adopter of it.
I wish that I could claim credit but I don't think I can.
Hala Taha: Okay, cool. So your gig economy course at Babson college was listed in Forbes top 10, most innovative business school courses in the country. What do you think made it so popular and have other business schools followed suit to teach similar courses since then.
Diane Mulcahy: I think what made it popular and by the way, it became popular over time. This was not a first time out of the gate success. The first time that I offered the course, which was about six years ago, it was canceled because of low enrollment. Nobody really had heard about the gig economy. It wasn't a common term and people were like, Gig economy, do you mean like gigabytes? Is this a computer course? I didn't
[00:05:00] really understand what it was. So the course really grew in popularity as the students figured out. Wait a second. The workforce has changing. Working full time for my entire career, particularly for just a few companies is not really an option anymore.
And I need to figure out how to work differently. And when students sign up for my class, that's really what they're interested. They show up and they're like, I'm going to graduate in six months or in a year, and you got to help me figure out how to actually go out there and succeed in this new way of working.
That's why they take it.
Hala Taha: And so when you were first teaching about the gig economy, was it an accepted concept or were you fighting any like skepticism at the time of this being like a real trend?
Diane Mulcahy: What I would say is when I first started teaching the gig economy, I was fighting the perception that it was even a trend at all.
Students came to
[00:06:00] class and they were like we're not sure that this is a real thing. And certainly. They had an academic interest in it. They were like, oh, isn't this possibly an interesting phenomenon in the economy. They did not at all take it on board as something that would personally affect their lives.
And I think that's been the most substantive change is now students come and they are completely convinced and engaged and it's personal. From day one. That's the biggest difference.
Hala Taha: Yeah. So what year was it when you first put out that course?
Diane Mulcahy: It was about maybe six years ago. So 2013. Yeah.
Hala Taha: Yeah, because so much has changed since then.
Now almost every big company you can think of is gig economy from like TaskRabbit to door dash to Uber eats. It's just everywhere, a new one pops up every day.
Diane Mulcahy: And that's what I think is so powerful about this trend is that it has grown and grown so quickly and had
[00:07:00] such a systemic impact on our economy on the way we live and the way we work.
It's incredibly powerful.
Hala Taha: Yeah. So how did the class end up becoming a book?
Diane Mulcahy: The book really grew out of the class. People would say to me, I've written other books on other topics. So I think it was natural for people to say, oh, are you going to write a book on this? And I was like, ah, I don't know.
Maybe not. And finally enough people had asked me that I thought to myself I'm just going to put together a proposal and floated out there. And if it gets picked up great, I'll know there's interest and I'll go with it. And if not, that's fine too. I really wasn't wed to a particular outcome and I put it out and it was pretty immediately picked up by an agent.
And that was the beginning. As soon as it was picked up, I finessed the proposal, we sold it to a publisher and I was often writing.
Hala Taha: So let's get to it, let's talk about your expertise. How do you define the gig economy?
Diane Mulcahy: That's such a good place to start because I feel like a
[00:08:00] lot of people hear gig economy and
they still think this is going to be all about Uber drivers, click, I'm not interested. And I just want to dispel that myth right upfront. The way that I talk about and define and write about the gig economy is much broader than that. It's really, if you're not a full-time employee in a full-time job.
Then you're in the gig economy. So it includes consultants, independent contractors, freelancers, and on demand workers, and also people who are working side gigs. So it's a very broad definition that cuts across all education levels, income levels, and across all industries and sectors. The gig economy is huge and it's broad.
Hala Taha: Yeah. I love an example that you gave in your book where you talk about it as a spectrum, where like you have the traditional corporate job on one side and unemployment on the other, and basically
[00:09:00] everything in between is gig work. Is that correct?
Diane Mulcahy: It's a very broad definition.
Hala Taha: So in your book you say that the gig economy will not only change the way we work, but the way we live. So what do you exactly mean by that?
Diane Mulcahy: The way that I would answer that is I would start with going back to the American dream. If we think about our traditional kind of default American dream, which is, you go to college, you graduate, you get a job, you build a career with a company, or maybe a couple of companies.
You get married, you buy a house, you have kids, you work for 40 years and then you retire. That whole life and that arc is really built around the foundation of a job and a career. And I think what's different in the gig economy is that foundation shifts. And it doesn't exist. You can really create and build and envision
[00:10:00] whatever kind of professional life that you look like.
And there's so many more opportunities available. So you can decide, you know what, I really love doing this kind of work. I'm going to build a portfolio that's based on that. Or I want to have this kind of lifestyle. That's, what's really important to me. And here's how much money I need to earn in order to build that kind of lifestyle.
So I'm in a work, 30 hours a week instead of 40, or I'm going to work 60 hours a week instead of 40. There's so much more. Flexibility and control over your professional life in the gig economy that you, I think have much broader capability to decide what kind of life you want to lead, because you have so much control over what kind of work you want to do.
Hala Taha: Got it. So let's spend a little time talking about how we got here. You say that there are two trends that drive the growth of the gig economy. The first is full-time jobs
[00:11:00] disappearing and the second is full-time employees becoming the last choice for many companies. In fact, one of the first issues that I read in your book is that it's 30 or 40% more expensive for companies to hire employees than it is to hire contractors.
So can you shed some color on this? How has capitalism evolved to bring us here? I
Diane Mulcahy: I don't know that it's capitalism that has evolved. I think that it's business that has evolved. If you look at Silicon valley where businesses are born and where the most highly valued and high growth companies in our economy are, what is a business model that creates very few jobs.
And hires very few full-time employees. So just think about all the tech companies that we're all familiar with, right? Facebook, Twitter, Dropbox, Twilio, whatever comes to mind, what you realize is those companies, they have huge global impact, right? They are global companies
[00:12:00] that impact the daily lives of millions of people.
And they're doing that with workforces, that number in general, fewer than 10,000. And often fewer than 5,000 employees, that is an incredible change in the way businesses operate and run. If what we're not seeing come out of Silicon valley is the next GE we're not seeing companies that are born and emerge and get financed and are incredibly highly valued that have 300,000 employees.
We're seeing a lot more companies. That have far fewer. So what's happening is companies are relying much more on technology. They're relying much more on. Distributed workforces on offshoring outsourcing, automating contracting. They don't need to have a workforce of full-time employees to be successful, to be high growth and to be highly valued.
It's really business that's driving the
Hala Taha: Got it. And what would you say is the state of job security right now, then?
Diane Mulcahy: There is no job security at all. There really isn't and I hate to be a Debbie downer. And I know from speaking to audiences that people have trouble hearing this for real and taking it on board.
But If you spend any time reading the business press, you quickly realize that companies are so dynamic. We are in such a competitive global economy that companies are constantly, launching new products, entering new markets, pivoting. Getting rid of old products, exiting markets, they're getting acquired.
They're merging, they're going out of business because they can't raise financing. They're raising tons of financing and scaling their businesses. There's just so much dynamism that companies are really looking at their workforce as something that is a work in progress constantly. They need to bring on new and different skills at different periods of time.
They need to staff up and staff
[00:14:00] down. They need to be in certain markets. They need to be leaving others. So it's not that work has become more precarious because people aren't working as well or doing as good of a job. It's really because the nature of our economy dictates how dynamic companies have to be.
So companies don't offer the security and the longevity and the career path that they used to. It's not possible. It's not viable.
Hala Taha: Yeah, that's so interesting that technology is just driving all of these trends, whether it's companies having to pivot all the time. So they're not disrupted, which then screws up everybody's job security.
And then also on the flip side, the gig economy, it's like technology's feeling that as well with all these platforms and apps that enable you to do things that you have never done before or businesses have never done before. So let's talk about how the gig economy is new part-time work, freelance jobs.
These things have
[00:15:00] totally been around forever. So can you explain why the concept of the gig economy in the past 10 years. Has emerged and what makes it different from the freelance work of the past?
Diane Mulcahy: It really isn't different. In many ways, the gig economy is nothing new under the sun at all. It really isn't.
People have been working this way. Forever. And, I think the difference is it used to be limited to the trades, the crafts, the creative professions. There were certain industries and sectors in which people worked this way fairly consistently. And it was the norm. And that was it. It was a niche way of working.
What's different. Is how widespread it's become. The fact that the, that working in the gig economy that working independently and not being a full-time employee in a full-time job has now. Entered into traditional middle-class and executive class roles. That's, what's different. And what's also different is that there is, as you
[00:16:00] mentioned earlier, the technology to remove the friction from those marketplaces.
One of the reasons that. It used to be so difficult to be a contractor or even a part-time worker, looking for a part-time job is that it was just too hard. It was hard for companies to excavate, where are the part-time workers, where the independent workers are they any good?
And it was very difficult for independent workers or part-time workers to find those positions. Technology has removed all of that friction. It's made those opportunities much more visible. Much easier to access more transparent and much more fluid. What we're seeing is. It's a virtuous cycle.
They're easier to access. They're easier to obtain. So there's more efficiency, there's lower cost. So then more people are doing it and that's the way it's going. It's only going to be growing because it's only easier and easier to do the more people participate in that system.
Hala Taha: Yeah. And with technology, I think it's also
[00:17:00] help build the trust and the transparency, because a lot of these apps and platforms, they have reviews. So basically you're able to see even like what this person you might hire it looks like and what their rating was for their work, whether they're driving you around or whether they're going to be designing some graphic design asset for you.
So I think that's another factor is that it's bringing trust into this type of work.
Diane Mulcahy: I might disagree with you on that. I think there's a significant amount of grade inflation on a lot of these platforms and a lot of the ratings. I think they can be useful and there is some variability and ratings that can be informative.
But at the end of the day, I think just like hiring employees, it's really, what are you looking for? And what are your particular needs? If I hire somebody who's a five-star editor to edit an article that I've written. That person may or may not work for me. They might be a five-star writer, but maybe they always write about
[00:18:00] fashion and style and in an area that I never write about.
And they really aren't very good at editing more of a business piece. So I still think there's an element of personalization and customization that determines whether these matches work. Despite the rating system.
Hala Taha: Fair enough. How big would you say the gig economy is? Is there a way that we can measure this or do you have any stats that showcase how big it is?
Diane Mulcahy: Yeah, I mean, I think it's most helpful to think about it as 30 to 40% of the workforce participates in the gig economy in some form. So they're either putting together a portfolio of gigs or they're working, some side gigs in addition to a full-time job. I don't really get too hung up on the numbers because this is such an emerging trend.
The numbers aren't that good people define gig economy differently. They measure it differently. They come up with different numbers. For me, when you pull it all the studies and surveys
[00:19:00] together in one place. There is a critical mass that forms around 30 to 40%. So I feel like that's a safe range to identify as true.
Hala Taha: And can you compare and contrast to gig economy worker with a traditional worker? What are the main differences in their lifestyle and things like that?
Diane Mulcahy: To me, the biggest difference between a gig economy worker and a traditional worker is their mindset. So a traditional employee has a mindset that is relatively more passive.
They outsource their professional development, their sense of security and their financial stability to an employer. And they settle into a job and don't really worry too much about anything outside of that. There's a level of kind of pacivity and complacency that goes along with that is impossible in the gig economy.
So when you look at people who work independently, it's a completely different mindset. They really have
[00:20:00] internalized and taken control of their own career and their own trajectory and their own sense of financial wellbeing. They decide how much work they want to do. They figure out who their ideal client is.
They assess what their value is in the market. They test that in the market, they set their own rates. They decide how much they want to work and where, and when they want to work to earn the money that they need to buy the lifestyle that they want. It's all completely personal, customized, proactive, strategic, and active, so very different mindset.
Hala Taha: And do you know why gig work is appealing for some people where it's not very appealing to others?
Diane Mulcahy: Yeah. If you look at surveys of independent workers and even just the interviews that I've done for articles and books that I've written on this topic, really the reason that people want to work independently is they want control over their life.
I think that's a very appealing concept to
[00:21:00] most of us when we hear it. Who doesn't want to control. Their life. When you work independently, you can decide. What hours you work, which means you can accommodate your personal priorities and you can balance your professional life with whatever else is going on in your life, your athletic endeavors, your creative pursuits, your family, and other personal obligations or goals that you might have.
So that control that ability to set your own schedule, to set your own weekly, monthly, yearly schedule is so important to people. It's also really important to be able to have control over your income. When you work a full-time job, you take your salary and you might negotiate it, but it's within a range and you're a price taker.
When you're in the gig economy, you're still somewhat of a price taker. You have to set a price that the market will bear, but you can decide to work more or less. You can decide to branch
[00:22:00] out and do different things. I might start as a coach to individuals. But I just, I might decide, Hey, I'm not making enough money.
I'm spending too much time on this and I'm not making sufficient revenue. I want to move up and start coaching and make corporations my clients, they pay more, they're more reliable. They have longer contracts. And so I can pivot my business model to either earn more money or work less or whatever my goals are.
And I think that. Freedom and control. And autonomy is really important to people. That's what drives people to independent work. And I think what is not appealing to people is that they are fearful. They are afraid that if they leave their job, they won't be able to support themselves that they won't be able to make enough money and that they won't be successful.
So it's the fear of going out and doing something new as well as the misperception that they
[00:23:00] have security. When you talk to full-time employees, many, I would say the majority feel like because I have a paycheck that goes into my account every two weeks. I am secure. I have security and it's simply not true.
They could be laid off Monday, right? Nobody has job security, but in their minds they perceive that they do. And it's very difficult to let go of that perception.
Hala Taha: Yeah. So you say for workers who are skilled, the gig economy provides opportunities to turn good jobs into great work and for less skilled workers in traditionally bad jobs, it offers the potential to turn those bad jobs into better work. So it's not a perfect solution, but it puts people in a better situation. So for example, a quote unquote, bad job is like working at McDonald's. Whereas now those same people can work at Uber or TaskRabbit and improve their quality of life by
[00:24:00] choosing when and how much they work. What are your thoughts on that?
Diane Mulcahy: Yeah, I think that's an important distinction because I feel like. When people talk about the gig economy, people who are negative on the growth of the gig economy, often point to lower skilled workers as being exploited or. Ending up in really bad circumstances because of the gig economy. And I'm not going to say that the gig economy is perfect or that solves the problem that is systemic in our economy and our society that people are poorly paid and lack access to benefits and safety nets and things like that because it doesn't.
What I like to point out though, is that these problems are systemic and they do exist in our traditional jobs economy. So right now, lower skilled workers end up working for, fast food chains for retail establishment. They're stockers at Walmart or they're cashiers at McDonald's and those positions
what we would classify as bad jobs. They're not well paid. The people who are working them don't have access to employer provided benefits and they don't have any control. They don't have control over how many hours they work when they work. And therefore they don't have any control over how much they make.
I think what's appealing to low skilled workers about the gig economy is although their economic situation stays basically the same in the sense that they're still not well paid and they still don't have access to employer provided benefits. What changes is they do have that control so they can decide when they work, which allows them to maybe manage
their financial lives differently. They can be home after school and not have to pay for after-school care, for example, because they get to decide when they work, they can also decide how much they work, which is something that somebody who's waiting to get assigned shifts can't do.
[00:26:00] So they do have some control over how much they make.
If it's on the run-up to Christmas, they can say, Hey, I'm in a drive on the weekends because I want to earn that extra money to have a fabulous holiday. Whereas before that wasn't within their control. So it's not a solution that's ideal. It's not a solution that's perfect. But it's a step in the right direction of improving the quality of life.
And the financial lives of lower skilled workers who don't have very many options to begin with.
Hala Taha: Gig economy sounds great. It's obviously a step up in the right direction for some people, especially if they're in bad jobs, it gives them more flexibility and control. If they're able to get gig work on some of these new platforms, but it's definitely not all roses and sunshine.
So what are some of the threats for workers in this space?
Diane Mulcahy: The people that are struggling the most. With working independently are the ones for whom it came out of the blue. It
[00:27:00] wasn't their choice. When you survey independent workers, the vast majority of working this way by choice more than 75%, but there is a minority group about 25%.
That are working this way because they're forced to, so they would prefer to be in a full-time job, but they can't get one. And a person in that situation might look like, a middle manager at a large company that was laid off during a downsizing. And they're not able to find another job or it might be somebody like
an executive assistant, who worked at a company for 20 years, was let go, and now maybe can find work, but not anywhere near the salary and benefit levels that they were earning, after 20 years at one company. So those people are dissatisfied. They feel very insecure in their work. They are often forced into situations where they are making less
than they were before and they are stripped
[00:28:00] of the benefits and the protections that they enjoyed as a full-time employee. So that's a picture of the type of person that is struggling in this new way of working.
Hala Taha: How about regulations when it comes to this type of work, does the gig economy make us rethink the role of government in any way?
Is there anything about regulations that you want to mention? In regards to this space
Diane Mulcahy: I'm a policy wonk. So I feel like that could be your last question. And I could just keep talking, but I won't, because at the high level, what I would say to that is we have a labor market in the US that essentially penalizes you, if you don't have a full-time job.
So what that means is. We have a labor market that is very supportive of full-time employees. If you're a full-time employee, you have access to benefits and protections and rights solely because you're a full-time employee in a full-time job. As
[00:29:00] soon as you decide, or are forced to work differently, if you say, Hey, I'm entrepreneurial.
I want to go hang up my own shingle or you're laid off or downsized or whatever. And you can't get a full-time job. As soon as you're out in that independent world, our labor market does a disservice to you. It essentially penalizes you, you are taxed additionally for working independently and you are stripped of the benefits and protections and rights that are only awarded to full-time employees.
So it's a very asymmetrical labor market that doesn't really work for the way that we work today. And I think as there's this huge debate about how do we classify people and are you an employee or a contractor. And again, that system is an artifact of a completely different way of working. It just doesn't capture the range and variety and choice about the way that people
[00:30:00] can work today.
Our labor laws, our labor market, our regulations. Our tax system all need to be updated to reflect this new way of working. And to me, what's surprising about the gig economy is that despite the fact that you're so penalized for leaving a full-time job, the gig economy has grown so tremendously. You would almost think that it would limit the growth of the gig economy.
And maybe it is on the margin. Like maybe if our labor market was much more supportive of independent workers. The gig economy would grow even faster than it is today. But I do think we have a lot of work to do on the regulatory and policy side.
Hala Taha: Got it. And let's focus on how we can thrive in the gig economy and what skill sets or even personality traits that we should start to build in order to succeed in this new way of work.
So can you just talk about how we need to change our definition of
[00:31:00] success in order to do well in the gig economy?
Diane Mulcahy: Yeah. That's a really important question. It's actually the first chapter of my book, because what we had talked about earlier, this idea that, for traditional full-time employees and for our traditional jobs economy, Success was pretty easily defined and it centered around, titles and climbing a corporate ladder and salaries and traditional measures of success that everybody was pursuing.
I think what's different and important about the gig economy is there so much more space to define your own success. And that's a really important place to start if you're thinking about transitioning to independent work, because. It's not going to work for you to go out and work independently, unless you have a clear idea of what the goalpost is.
Are you going independent to try to maximize your lifestyle, to try to work flexibly or have
[00:32:00] summers off with your kids or take every afternoon to train for the marathon? Is that what's important or are you transitioning to independent work to maximize your income because that looks like a very different plan.
So I think for my readers and for my students and for my coaching clients, the place I always start is please reflect on what success looks like to you? What is your definition? What are the values and priorities that are important for you to live in your life? And how do you build a lifestyle that reflects those, and that allows you to live them?
That has to be the first place to start in order to set up the path for you to truly be successful and feel like you're successful in what you do.
Hala Taha: That was very powerful and very good advice. So thank you for sharing. From my understanding, diversification is the new normal in the gig economy. So how is building a portfolio of
[00:33:00] gigs something that would benefit us in today's age?
Diane Mulcahy: Yeah, in, in investing they say diversification is the last free lunch, this idea that by diversifying you can actually reduce risk in a way that's essentially free. And it's the same in our professional lives. I do think it's interesting that if you go talk to any investment professional, they will tell you don't put all your retirement money into one stock.
You can't control what happens with that company. Any number of things could happen to that company that could really destroy the value of your retirement account. You don't want to do that. Make sure you invest in a broad portfolio of stocks. That's the way to protect your assets and grow them.
It's the same idea for our professional lives. If we put all of our employee eggs into one employer basket, we're incredibly concentrated. That's incredibly risky. Anything could happen to that company and we could be out of a
[00:34:00] job. And when we're out of our job, our income goes from a hundred to zero.
That's risky. When you talk to independent professionals, people who work independently, what they will say is they feel much more secure in their financial lives, working independently. Why? Because they have a diverse portfolio of clients. They know that if one client because out of business or their budget is cut, or the person they're working with ends up getting laid off.
They still have their other clients, their income might go from a hundred to 80, but it doesn't go a hundred to zero. And that makes people feel much more secure. They feel like they can count on their income over time. It's also true that they feel more in control of their financial lives, which we've already talked about in this conversation.
The idea that look, if I want to make more money, I can choose to work more, or I can choose to spend more time on business development, or I can put out a marketing campaign or I can go
[00:35:00] take a class and increase my skills and become more valuable in the marketplace. All these things are in my control. I can decide whether to do them or not.
And that makes a huge difference in terms of feeling secure for people.
Hala Taha: Yeah, totally. So in terms of this diversification, one might wonder, is there a benefit to being an expert or a specialist anymore? Or should we just dabble in a lot of different things and be pretty good at a lot of different things, instead of just focusing on being an expert, what are your thoughts on that?
Diane Mulcahy: Expertise is still valuable. There's no question. If you look around at some of the most highly paid positions in our economy, they are for people with deep knowledge or deep understanding or deep experience doing specific things or understanding specific topics. So that is in no way, meant to discount the value of expertise.
What I think though is, expertise is no longer something you can
[00:36:00] rely on for a few decades of your career. The world is changing too quickly. I think what's more important in our economy today is the idea of continuous learning, continuous skill development. That's the difference. You can have expertise, but it's more about how can you build on that expertise or extend that expertise?
The example I use in my book is. I'm a writer. I have expertise in writing. I've written books. I write articles, but I can extend that in order to become more valuable or to branch into other industries and sectors, I could take up writing essays or I could start writing corporate content, or I could start writing marketing copy, or I could, move into mystery novels or romance novels right,
but that sell more copies than your average business book. So I can take my expertise and develop it in different ways and extend it and expand it and amplify it. So that's not to say
[00:37:00] expertise is definitely not a static thing, but I do think there is still value for expertise. But you have to couple it with lifelong learning and skill development to be successful.
Hala Taha: Another fascinating concept you talk about in the book that I wanted to just touch on is called the deferred life plan. And basically it's our tendency to focus on things we should do or are expected to do while deferring things that we want to do until Sunday, which is a day that might never arrive.
So could you just dig deeper on that and explain how the gig economy and working in the gig economy could actually help us live more fulfilled and happier lives?
Diane Mulcahy: Absolutely. I think the old saying is some days not a day of the week, right? It's not actually, it's not actually a time or a concrete marker that you can work towards and.
Many people do they think, someday when I, or someday I'll dot.dot,
[00:38:00] and of course the traditional working life is essentially a deferred life because the idea behind it is I will work first for 30 or 40 years and build my career and build my sense of financial security. And then. I will go live my life and do all the things that I want to do.
Of course, we know the ending to that story, which is a lot of people never get there, or if they do, they never get there in the shape that they thought they'd be in. So they can't really execute on their plans. It's a risky proposition to defer your life until someday. What the gig economy does is it allows us a structure that doesn't require that.
So instead of saying, someday, when I retire, I'm going to go live on the beach. You can say, you know what I expect to, work in this job, I'm just out of college or out of graduate school. I'm going to work a job for two or three years, gain a lot of experience. And then I'm either going
[00:39:00] to, take a summer off and then move into a different job or I'm going to, take a summer off and then take that side gig I've been working on and turn it into a real business, give it a go.
Be an entrepreneur, but the point is you can decide ahead of time. I want to take that summer off, or I want to take a year off and I'll go live on the beach, then I'm not going to wait until I'm 60. I'm going to do it when I'm 32. That's what the gig economy allows. There are so many more natural
breaks and lulls in which you have the opportunity to say, Hey, this gives me the time and the space to do this other thing that I'm interested in doing. And I think it's incredibly more interesting and fulfilling to be able to do that now in my class where the students have problems. And it certainly with my clients that I coach.
What does that mean for me? What are my personal
[00:40:00] goals? What would I do with that kind of time? I don't even know. It sounds good, but I don't really know what I would do with it. So what I have them do is an exercise. We'll have them do a series of exercises around building this concrete list of things that they've always had in their mind.
So I start with, imagine that you had a year off and a year's salary to go with it. What would you do? And the reason that I structure the exercise that way is to remove the normal constraints that limit our imagination, right? So I give them time and money. Those are normally the constraints, then their imaginations run wild and that's okay.
Because guess what? At the end, they have the list. They have the list of things that they really want to do, and they can work from that list going forward. They can take a huge plan. And bring it down to size and make it something they could do in two weeks or a month and start ticking off the list.
So it's an
[00:41:00] incredibly valuable exercise and it's so amazing to see. Like the joy and the fulfillment that people have by feeling like they can execute these personal goals all along. It's like an incredible thing to watch when people actually start doing that.
Hala Taha: Yeah, this is one of the most interesting parts of this to me is the fact that it's no longer about working 40 years of your life, like a mad horse.
And then retiring and then relaxing when you're 65, 70 years old and saving money for that, I'm interested to hear like your perspective on retirement and the gig economy with variable income streams. It's probably very hard to save for old age if you're a gig worker. So how should people plan for retirement or do you think retirement will happen at all for people who are gig workers?
Diane Mulcahy: We're already seeing that retirement as we traditionally think about it. I love the analogy of the horse crossing the finish line
[00:42:00] and then collapsing because that's the traditional model and what we're seeing in the current baby boomers, they're reaching retirement age and.
They aren't in a position to retire. They don't have the money saved. And by the way, they don't want to just stop working. They've seen their parents stop working and become sedentary and become isolated and disengaged. And that's not the life that they want. So when I talk to people who are in the baby boomer generation, They want to continue to earn money and they want to continue to remain active and engaged.
They don't want a full-time job. They don't want that level of constraints, but they do want to remain professionally active. And I think that's a more realistic model for what the later part of our careers is going to look like, which is we might slow down a bit, but we're in general going to remain active and engaged, doing something.
[00:43:00] something that looks like what our main job has been, but, and maybe it's something completely differrent. For people who are in the throws of their working lives. Now, the best advice is still to save. There's really no way to get around that. Nobody's going to do it for you. Companies aren't going to do it for you. The government's not going to do it for you. It's all on you. So the best advice is still to save and that's partly because even if you plan to work into your seventies or eighties, or, never stop working, we don't always control that decision. People have health problems later in life.
And that's the most common reason that people stop working is because they're not able to continue working because of various health problems. For people who are still working, saving is still a really important priority and goal. The good news is when you're an independent worker.
You can save more and faster for retirement. If you're a high earner, then if you're an employee, but of course, I think it's worth emphasizing that there's a big difference between having the ability to save and then actually saving,
[00:44:00] because what we see across the board in the U S is that nobody saves well for retirement, even higher on us.
So it's a problem. The ones in the gig economy does not fix our retirement problems for sure. But I do think the old model of just sitting in a lounge chair is over.
Hala Taha: Yeah, definitely. And so let's stay on this topic of financial flexibility in the gig economy. If you're working in the gig economy, can you talk about the rise of the subscription economy in parallel with this gig economy. And why access is the new ownership nowadays?
Diane Mulcahy: Yes. I'm glad you brought this topic up. I think it's so important. So I call this the access economy. And to me, this is the personal finance revolution of our generation. I think it's so impactful on people's financial lives.
And by the way, it's still a
[00:45:00] tiny emerging trend. So I think this there's only good things to come from this. So what I mean by the access economy is instead of owning things. So instead of taking a whole bunch of time to save up a big pile of capital or more commonly, instead of going out and buying something really big and going into debt to pay for it, the access economy changes that game.
What it does is it allows you to access the lifestyle or the things that you want. Without having to buy them, which means you don't have to go into debt to own them. So it becomes a variable cost in your financial life, not a fixed cost, because of course, if you have a car payment or a mortgage payment or credit card payment, those are fixed costs.
You have to generate the same amount of revenue every single month in order to pay for that thing. In the access economy, everything is variable I'll use the example of
[00:46:00] transportation. I haven't owned a car in 10 years, so I access my transportation. It's a variable cost when I'm at home, living in the city, I'm using Zipcar and Uber and the subway and Hubway bikes and I'm walking.
And my transportation costs vary depending on how much I'm out in a boat. When I'm away on a business trip. My transportation costs go to zero. I don't need to earn revenue to cover my transportation that month, because I don't have a fixed cost that I'm trying to cover. That's what the access economy does.
You can replace a mortgage with rent, you can replace a car payment with access transportation. I rent a lot of my clothes. I use rent the runway, and a lot of the large retailers are starting to have a rental option. If I have a wedding or a graduation or a big party or new year's black tie event, I don't have to go buy something and then pay off the credit card for that.
I can just. Access it rent it. Boom, it's done. I don't own
[00:47:00] it. It's not my closet. I don't have to store it. I don't have to pay for it. There's an enormous amount of flexibility and freedom and choice and variation in being able to access our lifestyles. And by the way, for a lot of people, you can access a much higher lifestyle, then you can own.
So it's more rewarding. People enjoy it more.
Hala Taha: So a lot of my listeners are at the stage where they might be considering buying a home for the first time. And I noticed that you had three myths of home ownership in your book that I thought was really interesting advice that I'd like to share with my listeners.
So if you don't mind, I'll trigger each myth and you can explain it a little bit more. So myth one is my home will appreciate and value.
Diane Mulcahy: Yes. A lot of people have this idea that they will buy a house and that it's like an automatic investment or savings plan, right? There's no better place to put their money.
But in fact, if you look around the U S as a
[00:48:00] whole. Of course, there are some real estate markets like Boston and New York and San Francisco that have done phenomenally well over the past decade or decade and a half and homes have appreciated enormously and value, but there are many more markets in the U S in which that is not the case where home prices have stagnated.
Or even declined. And so if you're making a home ownership decision, like an investment decision with the assumption that homes only appreciate over time, that's a myth, that's a problem. And you should rework your model to assume that your home stagnates and value stays flat. And see if it's still an attractive proposition.
Hala Taha: Myth number two, owning builds equity.
Diane Mulcahy: That's related to myth number one, which is when you buy a house, the first let's say decade of payments are primarily interest payments. So you're building very little equity when you're
[00:49:00] paying your mortgage. What most people are assuming is that they're building equity because their home is appreciating, which as we discussed.
Certainly doesn't always happen. So when you build a model that assumes that your home does not appreciate. The idea that you're building equity falls apart. In many cases
Hala Taha: Myth number 3, I can deduct mortgage interest payments on my taxes.
Diane Mulcahy: Yeah. Mortgage interest payments are only for people who itemize their deductions.
So if you are not a person who itemizes your deductions on your tax returns, you don't get mortgage interest deduction. And now under the new tax regulations, because the standard deduction is so much higher. Even fewer people will be itemizers. And so the mortgage interest deduction applies to even fewer people. It's unlikely for the average person that they will benefit from that deduction.
Hala Taha: Got it. And so my last question, before we go
[00:50:00] is basically your perspective on the future of the gig economy and how it's going to evolve.
Diane Mulcahy: My view is that the gig economy is here. It's here to stay it's growing and it will increasingly represent what work looks like in the future. The way that I end my book is that I talk about this idea of, asking kids what they want to be when they grow up.
And traditionally kids have had an answer to that. I want to be a doctor. I want to be a lawyer. And what I say is, the kids of the future are going to have a list because careers are going to be made up of portfolios of work. And they're going to change several times over a lifetime because the economy is so dynamic.
People are going to be lifelong learners. They're going to have to change their skillsets over time. And we're going to do a variety of professional things over our working lives. The idea of doing one thing for 40 years for one employer. That's gone. That's the old
[00:51:00] model. That's not the future.
Hala Taha: Awesome and where can our listeners go to find out more about you and everything that you do?
Diane Mulcahy: The best place is to go to my website, which is Dianemulcahy.com.
And if you're interested in keeping up with my work on the gig economy, go to my contact page and sign up for my monthly newsletter, where I curate the articles that I've written, news that's going on in the gig economy and have a question of the month to help you. Think about making the transition to independent work successfully.
Hala Taha: Great. Thank you so much for your time. I enjoyed this conversation.
Diane Mulcahy: Thank you for having me. This has been great. I appreciate the thoughtful questions.
Hala Taha: Of course. Thanks for listening to young and profiting podcast. If you enjoyed this episode, don't forget to write us a review on apple podcasts or wherever you listen to the show.
Follow YAP on instagram @youngandprofiting and check us out at youngandprofiting.com. And now you can chat live with us every single day on YAP side on slack, check out our show notes or youngandprofiting.com for the
[00:52:00] registration link, you can find me on instagram @yapwithhala or LinkedIn, just search for my name, Hala Taha. Big thanks to the YAP team for another successful episode.
This episode, I'd like to give a special shout out to Tim and Parth. The duo is helping me launch a new YAP course that will provide best-in-class training for up and coming podcasters around the world. Right now we're heads down creating the content for this program and we can't wait to share more details in the coming weeks.
This is Hala, signing off.
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